Nissan's Ghosn says missing margin goal carries consequences

TOKYO -- Nissan Motor Co. CEO Carlos Ghosn warns that heads could roll if the company misses his target of an 8 percent global operating profit margin by March 31, 2017.

"Eight percent operating margin is a commitment. This is a clean-houser," Ghosn said, referring to a need to broom staff if the company falls short.

That goal is enshrined as the second "8" in Ghosn's Power 88 multiyear business plan. The first "8" stands for the target of an 8 percent global market share. Ghosn is more flexible on that target.

Ghosn outlined the six-year plan in 2011. Since then, the timeline for achieving 8 percent market share has slid a year -- to the fiscal year ending March 31, 2018 -- to allow time for Nissan to book the full-year impact of a wave of new product.

"The most important element of Power 88 is the sustainability of the performance, he said"

That puts Trevor Mann, the chief performance officer who is charged with delivering Power 88's promises, in the crosshairs. Fortunately for Mann, Ghosn says the company is on track to book the 8 percent operating profit margin. "I feel confident we will be on time," he said.

In the fiscal first quarter to June 30, Nissan's operating margin leapt to 7.0 percent from 5.8 percent a year earlier, thanks to improved factory-utilization levels, higher sales and favorable exchange rates. On Monday, Nov. 2, Nissan releases results for the fiscal quarter that ended Sept. 30.

The plan hinges on the U.S. Ghosn's goals call for 10 percent market share there.

"The objective I feel most comfortable with is 10 percent in the United States," Ghosn said. "Why? Because the dynamic is good, we have a strong team in the U.S., the dealers are fired up, [and] the products are being successful."

Through September, Nissan North America's market share in the U.S. held flat at 8.6 percent. Sales grew 5.6 percent, roughly in line with the market.

But Nissan is beefing up in key segments such as crossovers, with the next-generation Murano, and pickups, through a redesigned Titan. A midcycle update to the Altima sedan also should help. Infiniti expects a lift from the Q30 entry hatchback and the QX30 crossover, arriving next year.

"I'm optimistic on the U.S.," Ghosn said, adding that he expects U.S. industrywide sales to rise 2 to 3 percent in 2017.